Three Reasons People Lose Money with CopyTrading

Copy trading is great. Of course, if you know how to make it work for you and not against. Copy trading is also known as “mirror trading” and it is an strategy developed in late 2000s that allows market participants to copy trades of successful investors.

There is an obvious double benefit here: followers have an opportunity to make profits without getting their hands dirty, while lead investors will have more capital to work out their strategies.

Think of it as a social network. People come into the platform and interact, comment, and eventually subscribe or unsubscribe from investors. The decision is taken mainly on the type of portfolio the lead investor offers and of course, the return rate and profits record.

So… why people lose money when copying successful strategies?

1 - Laziness

The fact that your account will open and close positions based on others’ strategies, doesn’t mean you should not sit down and do some homework. Choosing the right lead investors is your top priority if you want to get good returns with copy trading.

Pick up the ones that are aligned with your trading profile and risk tolerance level. Otherwise, copy trading will become a dangerous thing for your capital. As a general rule, try avoiding exuberant ROI percentages. See what’s really inside and how the investor behaves.

2 - No diversification

Copy trading IS A TRADING STRATEGY. And as any profitable strategy, diversification must be taken into consideration to avoid easy-comes-easy-goes profits.

Spreading your money between a number of lead investors will considerably reduce your risks, just like it happens when operating with a regular investment portfolio.

3 - No patience

One of the common mistakes ever. Copy trading, as any other investment strategy needs time work out returns. You can improve it, suggest changes and so on, but if you jump from one to another lead investors, chances are you will be left empty handed. Give it time.

Does FortFS offer a social investment platform? Yes. Our service allows traders to copy trades from selected traders’ accounts. For more information on CopyTrading

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